Thursday, February 28, 2013

4th Quarter GDP was revised up today from a dismal -0.1 percent to a dismal +0.1 percent, confirming the stagnation character of the American economy. All the fine rhetoric from the White House and its chorus of apologists cannot hide the fact that US economy is stuck in the mud.

This should come as no surprise of course. Why should anyone expand their business or take on new employees in this environment? Heaven forbid that anyone should make a profit or try to get rich. That's the new sin.

So, what is left is stagnation. An economy that rewards people for not working and punishes those who wish to employ capital is an economy that is going nowhere.

Obama has managed to accomplish what few thought possible. He has shut down the mighty American economic engine.

Friday, February 22, 2013

Everyone knows, except Obama, that the entitlements are $70 trillion in the hole from an actuarial point of view. This means that, in finite time, they will run out of money.

So that, it is very, very clear that future generations will get nothing at all from social security and medicare regardless of the amount that they pay in. Unless something is done.

This we know (except for Obama, of course, who seems to know nothing).

All of this means that sooner or later, social security and medicare will be fixed. Running out of money is a fix. That does solve the problem.

A simple solution is to move out the age of eligibility for medicare (and index it). Do the same for social security. Means test both programs. Raise medicaid eligibility requirements. Doing these things would mean that social security and medicare will never run out of money.

So, a simple fix, can make things work. If we do it now. Delay means that when you do act, the actions must be much, more draconian. By postponing action, even for only a single year, the size of the cuts and the postponement of eligibility must be far greater than what would be necessary if we acted today.

This is the Obama "delay" tax. The longer you postpone dealing with the problem, the worse is the plight of future seniors. Either Obama doesn't know this (which is probable, because he isn't very focused on real issues) or he knows it and simply doesn't care.

Monday, February 18, 2013

Joe Stiglitz has penned an interesting article on the growing inequality of measured income in the United States. The facts that he uses, of course, are subject to the usual limitations. If you ignore everything the government does and all employee benefits, then you get one answer. If you include government spending and employee benefits you get an entirely different answer. But, lay that aside for the moment, because, I think, Stiglitz is on to something. There is growing inequality of opportunity in America, but not for the reasons Stiglitz is implying.

It is no wonder that wealthy liberals are at the forefront of the call for reduced inequality. They know that their policies will solidify their exalted status in society. They are not at risk.

The simplest example can be read in today's editorial in the NY Times in support of raising the national minimum wage from $ 7.25 per hour to $ 9.00 per hour. That kind of policy won't hurt the liberal elite, protected with incomes far, far above these numbers. This kind of policy -- outlawing jobs for folks with limited skills -- only hurts those who might have trouble affording a copy of the NY Times, not those writing their editorials.

Minimum wage laws are one of the many reasons that inequality is growing in the United States. Entitlement programs, welfare programs and the takeover of public schools by teacher unions are other reasons for the growing inequality. I doubt that many of the editorial writers for the NY Times send their own children to public schools or need access to welfare programs of entitlement programs, so, by all means, make them available to others.

Providing government largesse for those less fortunate inevitably increases the number of those less fortunate. Outlawing jobs for those with limited skills is cruel and makes things far worse. Stiglitz is right. Inequality is growing. But the reason is that government is growing. Growing government puts lower income citizens in the penalty box and makes it difficult for them to ever escape. That is what causes growing inequality.

It is interesting that Stiglitz thinks America was much more a land of opportunity one hundred years ago. That was a time that predated minimum wage laws, teachers unions, social security, medicare, medicaid and welfare programs. That was a time when a real land of opportunity existed because government played a much more limited role.

Wednesday, February 13, 2013

The President enjoys a good fight. The only question is will there be an opponent. Reality, of course, is one major opponent. But, the Presidents seems adept at ignoring reality.

The State of the Union speech last night was the Hugo Chavez plan for the US -- more body slams to the private sector, more money to be wasted on government and government's pals. As for the poor, raise the minimum wage. One wonders why Obama did not advocate a $ 100 per hour minimum wage. Using his logic, that should solve the problem of poverty in one grand stroke.

As for the hopes of the unemployed and underemployed, forget it. This President is not bothered by slack economic growth and growing numbers of folks disappearing from the work force. Just expand medicaid and food stamps. That should do it.

As for the national debt. Hey! That's one area where we lead the world. Let's maintain that lead!

Meanwhile, the war on capitalism continues unabated. Tax rich people!! That seems to be the main mantra of this White House.

Sunday, February 10, 2013

As three feet of snow blanket Boston, the Administration tries to push their "climate change" agenda, as if anything of substance could result from that. There is no scientific evidence that weather patterns are changing materially, but that doesn't keep the Obama folks from pointing to every weather-related problem as more evidence of climate change.

One wonders why the infrastructure in America is not built up to withstand these storms and help the public resist them. The answer? There is no money left. The liberal agenda, mainly the entitlements, have not only taken top priority, but will eventually absorb more than any possible tax revenues could ever provide.

One of the many downsides of the entitlement world is much, much slower economic growth. Entitlements destroy private savings, reduce and eliminate work incentives, and make personal responsibility a remnant of antiquity. A record number of Americans now live off of social security disability payments and that trend is only in its infancy.

Once the government promises to care for our every need, it loses the ability to provide basic services -- such as protection from natural disasters. Why was there no protective flood wall in New Orleans to protect its citizens from Katrina? Why? Because the money that should have been available was drained off for entitlements and social services. Why aren't there widespread use of generators in the Northeast so that citizens don't have to huddle without power for days in subzero weather? Why? Because who can afford generators with public service costs, including health care, spiraling out of control. Government services aren't cheap. Check out the post office.

Today, the government increasingly determines the priorities of what goods and services will be provided to the American public. Infrastructure, generally, is a loser. Gradually, but certainly, the historic role of government to provides roads, courts and national defense will wither away. It is no accident that sequestration strikes hardest at the defense department. In time, America will lose the ability to defend itself militarily. That seems to be Obama's plan.

So, don't be surprised if, increasingly, Americans are buffeted by natural disasters that they are unprepared for, foreign wars that they are unprepared for, and infrastructure that is simply corroding away as more and more Americans become wards of the state.